Credit Repair Options

Credit Repair Law

There’s no law in the United States against having bad credit but it sure can make life difficult. And expensive. Sometimes we develop a bad credit rating on our own but sometimes our credit files contain erroneous information. This situation is especially distressing when the error suggests bad behavior on the part of a conscientious consumer.

Fortunately, there is a federal credit repair law that requires settlement of disputes between consumers and the three largest consumer credit reporting agencies operating in the country. The Fair Credit Reporting Act, often seen as FCRA, became law in 1970 and falls under the jurisdiction of the US Federal Trade Commission (FTC).

The FCRA regulates the nature of the information a credit reporting agency can distribute and to whom it can be released. Consumer credit information cannot be passed along or sold to anyone who does not have a vested interest in the information, such as bankers, mortgage companies, auto finance companies, credit card companies, and the like. No individual consumer information can be distributed without a valid reason for doing so. The most common reason for sharing a consumer’s credit report is because the consumer has applied for a loan, line of credit, or a job.

FCRA regulations require all information on a consumer to be complete, accurate, and up to date. Any disputes between the consumer and the reporting agency must be addressed promptly and follow procedures sanctioned by the FCRA.

Any time a consumer’s application for credit is denied, the credit reporting agency that generated the negative report must notify the consumer in writing within 30 days of the denial. This notification must describe the reason(s) for the application’s denial and must outline steps the consumer can take to research or rectify any discrepancies or negative data.

A 2003 amendment to FCRA calls upon the three major credit reporting agencies - Equifax, Experian, and TransUnion - to provide each American consumer with a free updated copy of their credit report each year. These reports aren’t automatically disbursed but every consumer can ask for his or hers once every 12 months. Telephone, mail, and online requests are all honored. This amendment is known as the Fair and Accurate Credit Transactions Act (FACTA).

This free, annual review of one’s credit status is perhaps the most helpful tool provided in this credit repair law. It provides a way every American consumer can keep his or her credit report accurate and up to date. Doing so helps ensure the lowest interest rates, smallest deposits, and a higher likelihood that applications will be approved instead of denied.